Spain Factory Activity Expands More than Expected

The S&P Global Spain Manufacturing PMI fell to 48.7 in March 2026 from 50 in February, marking the weakest reading since April 2025 and missing market expectations of 50.4. The Middle East conflict intensified, driving geopolitical uncertainty, supply chain disruption and sharply higher energy and input costs. Output and new orders declined at a faster pace, with international demand posting its steepest drop since last April, while employment fell notably as firms adjusted to weaker conditions. Business confidence deteriorated sharply, hitting its lowest level since October 2023, as firms cited concerns over prolonged economic slowdown and rising inflation. Input prices surged to their highest since late 2022, supplier delays worsened to the greatest extent in over three years, and companies increasingly relied on existing inventories while cutting purchases and raising selling prices where possible.

The HCOB Spain Manufacturing PMI rose to 50 in February 2026 from a nine-month low of 49.2 in January, largely in line with analysts' estimates of 50.1. The latest data pointed to a stabilization in business conditions, following two successive months of contraction. New orders, employment, and purchasing activity continued to decline, though at a slower pace than in January, encouraging goods producers to keep their output relatively stable in February. However, export demand remained a challenge, with companies citing the adverse impact of US tariffs and the strong euro. In terms of price dynamics, input inflation accelerated to a 13-month high amid higher costs for various raw materials. In response, manufacturers raised their output charges for the first time since August last year, though only marginally due to ongoing competitive pressures. Lastly, the outlook for the year ahead remained optimistic, on hopes of improving demand, successful investments and expansion abroad.

The HCOB Spain Manufacturing PMI edged down to 49.2 in January 2026 from 49.6 in December, below market expectations of 49.9. This was the second straight month of contraction and the weakest reading since April 2025, weighed down by an accelerated decline in new orders. New export orders declined for a fifth month amid tariffs, a stronger euro against the US dollar, and weak demand from European markets. Despite this, production remained broadly unchanged, rising only slightly, which allowed firms to continue reducing their backlogs of work. Stocks of finished goods dropped for the fourteenth month, while purchasing activity was cut for a second month. Employment also fell for the fifth month in a row. On prices, input costs rose sharply, though intense competition and weak demand limited manufacturers’ ability to pass on these higher costs to customers. Still, manufacturers retained a notably optimistic outlook for the year ahead, anticipating a potential upswing in economic growth.